Tax Panel Tinkering Hurts Home Owners
The President's Tax Reform Panel made its final report and recommendations today for tax reform. Former Senator John Breaux outlined their findings on CNBC's Squawk Box this morning and plans to officially deliver them to Treasury Secretary John Snow later today.
Unfortunately, the outline seems to only tinker with the current code instead of providing the substantial or bold reform that was promised when the President's panel was formed.
In President Bush's State of the Union he said, "Year after year, Americans are burdened by an archaic, incoherent federal tax code. I have appointed a bipartisan panel to examine the tax code from top to bottom. And when their recommendations are delivered, you and I will work together to give this nation a tax code that is pro-growth, easy to understand, and fair to all."
The Panel's proposal is far from being easy to understand and is hardly fair to all by eliminating the deductions for local property taxes for Home owners.
The Panel offers some minor tinkering for simplification by going from 6 tax brackets to 4. But leaves the vast majority of complicated tax rules that will still require most Americans to hire a professional to prepare their tax return.
An Old Commercial use to ask "Where's the Beef".
I Ask "Where's the Major Reform?"
"Where's the easy to understand?"
"Where is the Bold Tax Reform that is Fair To All?"
The Panel has rearranged the deck chairs on a very ugly an outdated ship; the USS Income Tax Code. They had an excellent opportunity to give 3 or 4 options to the President and they failed miserably. It is time to bury the old code and bring in the new.
RIP IRS 1913-2005
http://tinyurl.com/c23o8
They gave little consideration to a true Flat Income Tax as proposed by a Jack Kemp or a Steve Forbes nor did they lay out a true consumption or Sales tax option (Fair Tax) as supported by the NTU (National Taxpayers Union) or by AFFT ( Americans for Fair Taxation).
Instead they are supporting a plan that will hurt many American Home owners by eliminating State and local property tax deductions, capping mortgage interest deductions and eliminating Home Equity loan interest deductions.
On CNBC's Squawk box this morning, Senator John Breaux argued that these deductions benefit high tax blue states like California and New York and that States that have little to no property taxes should not subsidize those States. As the host tried to point out, it is not a subsidy issue at all it is a matter of fairness and not taxing that income twice.
By eliminating this deductions, Home Owners will pay tax twice on the income earned. It is an issue of tax fairness.
Fighting against Double taxation in the code has been a strong Republican argument for tax reform changes for years. Republicans should see this as a very bad reform package and push for a much better and bolder reform plan.
The Fair Tax is the Better Choice by Far.
Blue State Democrats like Senator Clinton and Senator Schumer of New York should certainly join the chorus as well.
As I listened to the Tax Panel discussions , they tried to discuss the very popular "Fair Tax", However, they misrepresented all the features of this very Progressive and well researched plan that has been around for almost 10 years.
They used incorrect or worst case scenario numbers in their presentations and discussions which did not give a Fair hearing to a National Retail Sales Tax with the added features found in the Fair Tax (HR25).
Talk Show Host Neil Boortz, has written a very informative and humorous book( NY times Best Seller) about this tax plan in conjunction with Congressman John Linder who is the key sponsor of the Legislative package HR25.
The Fair Sales Tax plan is already in full legislative form waiting in the halls of Congress for more Co-sponsors.
The Fair Tax is ready to supercharge our economy, allow workers to take home 100% of their paychecks, truly untax the poor and save American jobs.
There are currently 46 Co-sponsors of the Bill and many Congressman were waiting to see what the President's panel came up with before they decided on what to support. Those Congressman can see that the Panel's plan will not fly with Home Owners and they are now free to support a better plan- The Fair Tax - Sales Tax plan HR25.
The Fair Tax - HR 25/S25 eliminates personal and business income taxes, eliminates the Payroll tax, eliminates the Alternative minimum tax - AMT, eliminates estate tax and Capital Gains taxes; Replacing them all with a one time Retail Sales tax on NEW purchases of Goods and Services. Let Wal-Mart worry about collecting the taxes and free up the American worker and the Middle class from the burden of the IRS Tax Code.
The Fair Tax Plan actually maximizes the Mortgage deduction in a very different way. There is no income tax to get a refund from you keep 100% of your pay. That is an equivalent of giving a current Home Owner with a mortgage a 100% deduction of interest and a 100% deduction of principal payments on his current mortgage. That is a far better Home Ownership plan that all of Congress can support.
I wrote about it back in August. http://fairtaxreform.blogspot.com/2005/08/mortgage-deduction-maximized-under.html
The Fair Tax Plan also boldly and logically meets the true criteria set down by the President. The Fair Tax is easy to understand and is fair to all. See the top ten economic benefits of the Fair Tax at my blog: http://fairtaxreform.blogspot.com/2005/02/top-ten-economic-benefits-of-fair-tax.html
With the fear of losing the local property tax deductions and some mortgage deductions, perhaps Democrats will wake up and support Fair Tax Reform and sign on to HR 25/ S25. If not the loss of local property tax deductions will be a killer in States like New York and California.
Those that Know the Facts, Love the Fair Tax.
Unfortunately, the outline seems to only tinker with the current code instead of providing the substantial or bold reform that was promised when the President's panel was formed.
In President Bush's State of the Union he said, "Year after year, Americans are burdened by an archaic, incoherent federal tax code. I have appointed a bipartisan panel to examine the tax code from top to bottom. And when their recommendations are delivered, you and I will work together to give this nation a tax code that is pro-growth, easy to understand, and fair to all."
The Panel's proposal is far from being easy to understand and is hardly fair to all by eliminating the deductions for local property taxes for Home owners.
The Panel offers some minor tinkering for simplification by going from 6 tax brackets to 4. But leaves the vast majority of complicated tax rules that will still require most Americans to hire a professional to prepare their tax return.
An Old Commercial use to ask "Where's the Beef".
I Ask "Where's the Major Reform?"
"Where's the easy to understand?"
"Where is the Bold Tax Reform that is Fair To All?"
The Panel has rearranged the deck chairs on a very ugly an outdated ship; the USS Income Tax Code. They had an excellent opportunity to give 3 or 4 options to the President and they failed miserably. It is time to bury the old code and bring in the new.
RIP IRS 1913-2005
http://tinyurl.com/c23o8
They gave little consideration to a true Flat Income Tax as proposed by a Jack Kemp or a Steve Forbes nor did they lay out a true consumption or Sales tax option (Fair Tax) as supported by the NTU (National Taxpayers Union) or by AFFT ( Americans for Fair Taxation).
Instead they are supporting a plan that will hurt many American Home owners by eliminating State and local property tax deductions, capping mortgage interest deductions and eliminating Home Equity loan interest deductions.
On CNBC's Squawk box this morning, Senator John Breaux argued that these deductions benefit high tax blue states like California and New York and that States that have little to no property taxes should not subsidize those States. As the host tried to point out, it is not a subsidy issue at all it is a matter of fairness and not taxing that income twice.
By eliminating this deductions, Home Owners will pay tax twice on the income earned. It is an issue of tax fairness.
Fighting against Double taxation in the code has been a strong Republican argument for tax reform changes for years. Republicans should see this as a very bad reform package and push for a much better and bolder reform plan.
The Fair Tax is the Better Choice by Far.
Blue State Democrats like Senator Clinton and Senator Schumer of New York should certainly join the chorus as well.
As I listened to the Tax Panel discussions , they tried to discuss the very popular "Fair Tax", However, they misrepresented all the features of this very Progressive and well researched plan that has been around for almost 10 years.
They used incorrect or worst case scenario numbers in their presentations and discussions which did not give a Fair hearing to a National Retail Sales Tax with the added features found in the Fair Tax (HR25).
Talk Show Host Neil Boortz, has written a very informative and humorous book( NY times Best Seller) about this tax plan in conjunction with Congressman John Linder who is the key sponsor of the Legislative package HR25.
The Fair Sales Tax plan is already in full legislative form waiting in the halls of Congress for more Co-sponsors.
The Fair Tax is ready to supercharge our economy, allow workers to take home 100% of their paychecks, truly untax the poor and save American jobs.
There are currently 46 Co-sponsors of the Bill and many Congressman were waiting to see what the President's panel came up with before they decided on what to support. Those Congressman can see that the Panel's plan will not fly with Home Owners and they are now free to support a better plan- The Fair Tax - Sales Tax plan HR25.
The Fair Tax - HR 25/S25 eliminates personal and business income taxes, eliminates the Payroll tax, eliminates the Alternative minimum tax - AMT, eliminates estate tax and Capital Gains taxes; Replacing them all with a one time Retail Sales tax on NEW purchases of Goods and Services. Let Wal-Mart worry about collecting the taxes and free up the American worker and the Middle class from the burden of the IRS Tax Code.
The Fair Tax Plan actually maximizes the Mortgage deduction in a very different way. There is no income tax to get a refund from you keep 100% of your pay. That is an equivalent of giving a current Home Owner with a mortgage a 100% deduction of interest and a 100% deduction of principal payments on his current mortgage. That is a far better Home Ownership plan that all of Congress can support.
I wrote about it back in August. http://fairtaxreform.blogspot.com/2005/08/mortgage-deduction-maximized-under.html
The Fair Tax Plan also boldly and logically meets the true criteria set down by the President. The Fair Tax is easy to understand and is fair to all. See the top ten economic benefits of the Fair Tax at my blog: http://fairtaxreform.blogspot.com/2005/02/top-ten-economic-benefits-of-fair-tax.html
With the fear of losing the local property tax deductions and some mortgage deductions, perhaps Democrats will wake up and support Fair Tax Reform and sign on to HR 25/ S25. If not the loss of local property tax deductions will be a killer in States like New York and California.
Those that Know the Facts, Love the Fair Tax.
posted by Merrill Bender | 10:27 AM
4 Comments:
"Tax Panel Tinkering Hurts Home Owners"
Hello, did it ever occur to you that the FairTax hurts renters? Buy a home and pay no tax on the principal...if you can't buy a home, you have to pay a LOT of tax (three times as much as a homeowner over 30 years for equivalent housing, five times as much over 50 years). Hiw is that Fair?
"Mortgage Deduction Maximized Under the Fair Tax"
Renters' tax penalty maximized and made explicit under the Fair Tax.
Second Class Citizen -
Renter's will pay the Fair sales tax but the apartment owner will have some reduced overhead and rents will be adjusted in the marketplace.
That adjustment is not enough on its own.
So the Fair Tax assists you in two ways;
First you will take home a 20 to 30 % larger paycheck each week with no federal income or payroll tax withdrawal.
Second is the Prebate system that will send you a monthly check to help cover the cost of the Sales tax up to the poverty line. ( Family of 4 $479/m)
You also mentioned that Housing is very expensive in your area at almost 8 times your earnings.
Fair Tax estimates a lowering in mortgage rates due to replacing the income tax system and lowering costs for Banks in Corporate income tax and in payroll tax. Lower rates can make it easier to buy a home.
Fair Tax also estimates strong economic growth with new and higher paying jobs due to the economic boom caused by repatriating captial to US shores and providing a tax free zone for American Manufacturing based on US shores.
A better job with higher pay may also be the result for you and an opportunity to buy your first home or You may find a better job in a different city with more reasonable housing prices.
On balance I beleive even as a renter you will have more spendable income than you did before the fair tax is enacted.
Rents will be adjusted in the marketplace? Like the say rents were adjusted after the adoption of Proposition 13 in California, which cut property taxes by more than half..without ANY reduction in rents?
The rent "adjustment" (or lack thereof) was so egregious in California that angry renters succeeded in passing a number of local rent controls, after not getting the rent relief promised by supporters of Prop 13.
It is an inconvenient truth that there is little federal income or payroll tax embedded in rent, due to the favorable federal tax treatment of rental property. (And tax can be deferred indefinitely on capital gains from the sale of rental property - just buy another rental property or equal or greater value, which is what many landlords practice.)
The largest tax embedded in rent is the property tax, which is not eliminated or even reduced under FairTax. And in many states, property taxes are higher on rental property than on equivalent owner-occupied homes. This makes the FairTax a tax on top of a tax (the extra property tax attributable to rental status) on top of a tax (the base property tax).
The FairTax redistributes income from renters to homeowners (because homeowners enjoy untaxed spending and consumption not available to renters), which is the last thing I would expect anti-redistributionists to support.
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